Employer support towards childcare costs

Some large local employers such as the NHS and the local authorities can be encouraged to help towards childcare costs. For a full list of the help on offer, please see the 'Help with childcare costs for working parents' factsheet from the National Childcare Campaign daycare trust, or talk to your employer. Some of the more common ways employers can help towards childcare costs are listed below.

Childcare Vouchers

Childcare vouchers are a way of paying for childcare, usually via a paper voucher redeemable by the childcare provider, and can be offered as part of a salary sacrifice or salary plus scheme.

To qualify for childcare vouchers:

• You must live with and have parental responsibility for the child who will use the childcare.
• You must have an 'eligible' child: A child qualifies up to 1 September following their 15th birthday, or if the child has additional needs, up to 1 September following their 16th birthday. The number of children in the family makes no difference to the amount of the exemption.
• The childcare you use must be registered or approved.
• Your employer must offer a childcare voucher scheme.

As an employee, you do not have to pay tax and National Insurance contributions on childcare vouchers worth up to £55 per week (£243 per month). As a result, you may save money on childcare costs. If you meet the above criteria, you are eligible to exchange part of your salary to childcare vouchers tax free as long as the amount taken does not take your wage below the lower earnings limit for National Insurance (£390 per month or £90 per week). Please note that these savings depend on the level of Income Tax and National Insurance you pay. For more information, please refer to the factsheet above.

Childcare Subsidies

If you are participating in the New Deal for Lone Parents programme and work less than 16 hours per week, you may be able to access support through the Childcare Subsidy. The subsidy allows you to claim:

• Up to £87.50 per week for one child.
• Up to £150 per week for two or more children.

If you meet the criteria, you can claim the subsidy for up to 52 weeks.

Workplace provision

Some employers provide workplace or in-house childcare provision on their own premises such as a workplace nursery or holiday playscheme. If the employer is wholly or partly responsible for financing and managing the provision, all of the costs of using this type of chilcare are exempt from tax and National Insurance contributions.

Employer-contracted or directly-contracted childcare

This is where your employer draws up a contract with your childcare provider directly, and pays for some, or all of your childcare costs. The first £55 per week (£243 per month) paid by your employer is exempt from tax and National Insurance contributions. This type of childcare can be offered as a salary sacrifice, or a salary plus scheme. To qualify for this type of childcare you meet certain criteria:

• You must live with and have parental responsibility for the child who will use the childcare.
• You must have an 'eligible' child: A child qualifies up to 1 September following their 15th birthday; or if the child has additional needs, up to 1 September following their 16th birthday. The number of children in the family makes no difference to the amount of the exemption.
• The childcare you use must be registered or approved.

For more infomation, please refer to the factsheet above.

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